New Bern receives positive fiscal audit

Wednesday

The city of New Bern received a clean audit for 2012 and repaired a couple of reporting weaknesses from prior years.

The city of New Bern received a clean audit for 2012 and repaired a couple of reporting weaknesses from prior years.

Gary Ridgeway of the accounting firm McGladrey presented the annual audit Tuesday night to New Bern aldermen, saying the unqualified opinion was the highest assurance an auditor can provide a city.

However, there were two “significant deficiencies” on financial reporting in prior years that were corrected when the city’s new finance director, Keith Fiaschetti, came to work a year ago.

The law enforcement pension plan finances have not been reported prior to 2012 and the Other Post Employment Benefit Obligation funds have been understated in some areas and overstated in others in prior years. Fiaschetti and his staff brought those line items back into compliance, Ridgeway said.

Powell Bill documents, or the funding for road and sidewalk improvements, also were not as up to date in prior years as they should have been, but the finance department was working to improve that, Ridgeway said.

The city also needed to make sure its bank reconciliations were done on a monthly basis, he said.

Fiaschetti said when he started work as the finance director he was doing the bank reconciliations daily. But the auditors said they still wanted it done on a monthly basis, which Fiaschetti agreed with and said was a positive change.

Ridgeway said he received excellent feedback from management while doing the audit.

“We wanted the new auditor to come in and leave no stone unturned,” Fiaschetti said Wednesday. “That was the instructions given to them before they started the audit. We wanted a complete top-to-bottom review, and some things shook out from previous years.”

After Ridgeway gave his report, Fiaschetti presented aldermen with the city’s first comprehensive annual financial report, a huge undertaking that went back 10 years. But the presentation focused mainly on the city’s financial growth in the past year.

The CAFR will be an asset for the city when issuing bonds or getting bond ratings. It meets all FCC rules and provides investors with a wealth of information. It also maximizes the transparency and accountability of the city’s public finances, Fiaschetti said.

Revenues for the city grew from $28.4 million in 2011 to $31.4 million last year because of $3 million in Hurricane Irene reimbursements from the Federal Emergency Management Agency (FEMA), Fiaschetti said.

There were no new revenue sources, he said.

One of the major accomplishments was meeting the city’s goal to have a 25 percent fund balance in reserves, Fiaschetti said.

He presented a chart showing there was relatively no fund balance in 2008, only 0.74 percent of the general fund. In 2011, there was 17.80 percent in reserve funds. A surplus of $2.8 million in 2012, compared to $2.3 million in 2011 drove the reserves up to 25 percent last year, Fiaschetti said.

The city had revenues of $1.2 million over budget that came from $424,000 in property taxes and $600,000 from sales tax revenues. Expenditures last year were under budget by $1.6 million. That was because all departments spent only in areas where it was needed, Fiaschetti said.

The city’s electric fund, with revenues of $64.1 million, has $491,000 in surplus, and the cash and investments in the fund are improving, Fiaschetti said.

The city’s water fund, with revenue of $10.9 million, has a surplus of $1.3 million. The city was able to fund the $3.4 million Neuse Boulevard water main replacement project that is ongoing from the water fund balance, which saved the city $500,000 in interest and closing costs on a loan.

However, the water fund has a debt service of $3.1 million, about 32 percent of total expenses because the city has its own water treatment plant. The long-term debt facing the water fund is $35 million. But Fiaschetti said he was not worried about that because the water department was self-supporting.

The city’s sewer fund has an $800,000 surplus. Although it is struggling to pay short-term obligations, the fund’s performance is improving, Fiaschetti said.

The city also has $562,031 in the employee benefit insurance fund, up from $193,238 in 2011.

Eddie Fitzgerald can be reached at 635-5675 or at eddie.fitzgerald@newbernsj.com. Follow him on Twitter @staffwriter3.

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